Canadian Government Eases Mortgage Rules to Tackle Housing Crisis

Canadian Finance Minister Chrystia Freeland announced changes to mortgage rules aimed at making housing more affordable. The cap on insured mortgages will increase to C$1.5 million, and loans for a 30-year period will be available for first-time and new home buyers. The measures aim to incentivize new housing construction.

On Monday, Canadian Finance Minister Chrystia Freeland revealed new mortgage rules designed to address the country's escalating housing crisis. The changes include raising the cap on insured mortgages to C$1.5 million from the previous C$1 million, a move intended to allow more individuals to secure housing with a minimum 5% down payment.

Adjustments also extend the availability of 30-year mortgage loans to both first-time home buyers and purchasers of newly built homes. Previously, this three-decade amortization period was exclusive to first-time buyers of new constructions. Freeland announced that these alterations would stimulate new housing construction and alleviate the housing shortage.

The policy shift comes as Prime Minister Justin Trudeau's approval ratings have plummeted to near-record lows of 30%. Analysts attribute this decline to the widespread struggle with soaring home prices and rents. Unlike the U.S., where fixed-rate mortgages can span up to 30 years, Canadian mortgages typically last 25 years with rates resetting every three to five years, which has added to the nation's affordability issues.

(With inputs from agencies.)